THE DANISH LABOR MARKET
The Danish labor market consists of a balance between low job protection and a high level of social security.
Here, you'll learn about the following:
Danish work culture
Terms of employment
Taxation and wages
Parental leave and benefits
Unemployment insurance funds
Professions that require authorization
The Danish Labor Market is characterized by at set of conditions and follows the concept of flexicurity which means that it is distinguished by flexibility and security for employers as well as employees.
Danish work culture
Danish work culture can be described as informal, flexible, and autonomous.
An informal, non-hierarchical environment
The typical Danish workplace is characterized by an informal atmosphere and a flat management structure. Teamwork and knowledge-sharing are valued traits, and the hierarchal distance between senior and junior employees is generally short. Everyone is encouraged to participate actively and voice their opinion in the workplace, regardless of their position.
Both planned and informal meetings are typical in the Danish workplace. It is not uncommon to have informal work-related discussions with colleagues during a coffee or lunch break. When a meeting is scheduled, however, it is generally expected that participants arrive on time and come prepared to take part in the discussion. Punctuality is highly valued.
Flexible working conditions
A typical full-time work week in Denmark is 37 hours (usually the work week is Monday-Friday), making it one of the shortest in Europe. A late work meeting will usually not run past 17:00 (5 PM) and most people leave around or before 16:00 (4 PM) – depending on field and type of work. Employees are generally given a fair amount of flexibility and autonomy to organize their workday around their individual needs - if deadlines are met. With the flexibility that Internet access enables, it is also becoming easier to negotiate working from home one or a few days a week.
The autonomy and flexibility typically granted to employees have many positive effects, including reduced stress, high levels of job satisfaction, and committed workers. Employers, in return, value employees who are self-motivated, independent, and willing to take initiative.
Socializing in the workplace
Danish society is very family-oriented, so co-workers do not necessarily socialize after working hours. It is common, however, that a workplace hosts social activities for employees (and sometimes also families), often several times a year.
Terms of employment
One of the greatest differences between the Danish labor market system and similar systems of other countries is that the Danish labor market is not primarily based on laws. Instead, it is based on collective agreements (Danish: 'overenskomster') between trade unions and employer associations. This is often called ‘The Danish Model'.
Nevertheless, many positions in Denmark are not included in collective agreements, which means employees have contract freedom and can negotiate, form, and influence their own terms of employment directly with their employer. There are, however, general work legislations regarding vacation, parental leave, etc. that all employers are obligated to follow.
Salaried Employees Act
Many employees in Denmark hold salaried employee positions under the Salaried Employees Act (Danish: 'Funktionærloven').
The Salaried Employees Act dictates a wide range of rights and obligations for employers and employees. The Salaried Employees Act includes regulations on dismissal and resignations, parental leave, commission, bonus pay-out, illness, competition clauses and non-solicitation clauses.
In other words, with salaried employee status, an employee acquires certain entitlements in relation to his or her employer such as a fixed notice period when resigning, a reasoned explanation for dismissal, and paid sick days and sick leave.
Both public and private employees can be salaried employees. It is, among other things, the work tasks that decide whether you are a salaried employee and thus protected by the Salaried Employees Act.
You have the status of a salaried employee if you meet these requirements:
- You work more than 8 hours a week on average
- You have been employed for more than 1 month
- You work in the following positions or fields:
- Business and administration, purchasing and sales, or warehouse services.
- Technical or clinical services except handicraft work or factory work. Technical or clinical services are performed by e.g., draftsmen, laboratory technicians, or dental assistants.
- Management or supervision of other people’s work on behalf of the employer.
- Or if you have an employer who gives you instructions and tasks.
There is no minimum wage in Denmark regulated by law. Instead, minimum wages are negotiated between trade unions and employer unions on a per-industry level. If you are employed in the private sector in Denmark, you will generally negotiate your own salary. However, part of the private sector is regulated by private-sector collective agreements concerning salary levels and terms of employment. As a private-sector employee, your salary will be a gross salary including pension.
In the public sector, salaries are regulated by collective agreements, and your salary will be automatically regulated as your seniority increases. The compensation is a net salary to which a certain percentage is added in pension.
You will typically have the possibility of negotiating your salary with your employer once a year - both in private and public sector jobs. There is no guarantee, however, that the negotiation will lead to a salary increase.
A standard work week in Denmark is 37 hours, but many employees work more than that. However, your working hours should not exceed 48 hours on average per week, over a four-month period. In addition, you are entitled to 11 hours of rest within a 24-hour period, and to one full day (24 hours) off per week.
If it is important to you that you work no more than 37 hours a week, this must be clearly stated in your contract. If you are to be paid overtime or have the option of taking time off in lieu, this must also be stated in your contract.
When you get a job, you will receive a contract. In the contract you can read the terms of your employment. If you have any issues understanding the contract, or if any sections raise concerns or doubts, you can consider joining a trade union. They will be able to help you check if your employment conditions are legal and fair. Trade unions offer help with contracts, negotiation, work-related legal advice and so on.
For more information, see the section about trade unions.
As an employee in Denmark, you are entitled to five weeks of holiday per year. The new holiday act from September 2020 introduced the system of concurrent holiday: the holidays accumulate on an ongoing basis and can be taken as soon as they have been earned. Under the New Holiday Act, the holiday year begins on September 1st and ends on August 31st the following year. You can take your holiday from September 1st to December 31st the following year.
If you are entitled to paid holiday and receive a monthly salary, you will continue to receive your salary during your vacation days. If you are paid by the hour, however, your employer pays your holiday allowance to Feriekonto every month ongoing. You can then apply to receive your holiday allowance from Feriekonto which is a system that administrates holiday allowance for all employees that are not included in a collective holiday arrangement.
If you change jobs, you are still entitled to all your earned holidays and the holiday pay. If you move to another country, your holiday pay can be claimed and paid out to you before you leave.
More detailed information about holiday pay and how to claim your holiday allowance can be found on the website of Workindenmark, and you can also read about holiday pay on the website of Life in Denmark.
While the current age of retirement in Denmark is 67 years, many Danes choose to continue to work. Pension savings are usually between 10-18% of your salary. Usually, you will pay 1/3 of this amount in pension contribution from your salary, and your employer will pay 2/3. The contribution may be different if you work in the public sector.
There are various types of pension schemes in Denmark:
- State pension scheme (in Danish: Folkepension), which is regulated by law and is a part of the social security system in Denmark.
- Labor market supplementary pension (ATP Livslang Pension) - a statutory pension scheme for all wage and salary earners between 16 and 67 years of age, who work at least 9 hours per week.
- Labor Market pension schemes agreed between the various players in the labor market as a part of a collective agreement in a specific field.
- Company pension schemes that are agreed upon individually between the employer and employee.
- Individual pension schemes that individuals set up with their bank or a pension fund independently of their employer.
In addition to a state pension, many employees have a company pension scheme or a collective pension scheme as part of their contract. In some cases, they have a private pension scheme too.
The state pension scheme is part of the Danish social security system and is regulated by law. You are entitled to state pension when you reach the state pension age if you fulfill certain conditions. Also, special rules may apply to you, e.g., if you have lived in an EU/EEA member state, Switzerland, or a country with which Denmark has concluded a special pension agreement.
In some cases you can collect your Danish State Pension while living abroad. The rules regarding state pension abroad depend on several things: the country you live in, whether you already receive state pension or you are going to apply for state pension, etc.
Taxation and wages
We recommend that you read an introduction to taxation in Denmark on the Danish Tax Agency’s website.
Denmark has a progressive tax system that strives to ensure equal access to several different services for all citizens. Welfare benefits, state pension, child benefits, and public institutions such as schools, hospitals, libraries, and the police are all free, public services in Denmark.
As a rule of thumb, the percentage you pay in taxes increases proportionally to your income. Certain expenses, such as work union memberships and certain interest expenses, can be deducted from your taxable income prior to taxation. Income in the form of holiday benefits, fees, bonuses, and commissions are all considered taxable income - as well as fringe benefits (e.g., a company provided car and/or telephone, free internet, employer-funded health care services/housing expenses/relocation costs/school fees, etc.).
Parental leave and benefits
In general, Denmark has a generous parental leave policy: Both parents are entitled to parental leave and in some cases one or both parents can receive parental stipends and benefits compensating the income they do not receive during maternity/paternity leave.
If you are new to the Danish job market and employment system, it can be hard to figure out if you are eligible for receiving parental stipends and benefits. Paternity/maternity benefits also vary depending on many factors, e.g., whether you are employed in the public or private sector and under which conditions.
It is always a good idea to get an individual assessment of your eligibility, so you know what kind of benefits you are entitled to, if any. Your trade union can give you individual guidance on planning your parental leave and give you an assessment of your rights before, during and after parental leave.
Paternity/maternity benefits are administered by Public Benefits Administration (Danish: 'Udbetaling Danmark').
Trade unions (Danish: 'fagforening') play a central role in the Danish labor market and are widely respected. Most employees in Denmark belong to a trade union. However, it is up to you entirely whether you would like to join a union – and which one you want to join.
The primary responsibility of trade unions is to negotiate with employer associations on pay and working conditions. However, unions also offer other services such as legal advice to members in the case of a conflict with an employer, or a work-related injury.
Many unions are associated with specific unemployment insurance funds (Danish: 'A-kasse'), although you are not required to join an unemployment fund as a union member, or vice versa.
You are free to choose which trade union you want to join (if any). Some unions only accept members with a certain level of education or a specific field of work (e.g., the trade union IDA is for engineers and people with similar backgrounds). Many people choose a union based on their education and/or line of work, but you can also choose an independent union. Often your employment contract will specify the union responsible for your field of employment; this does not mean, however, that you must join that specific union. You can ask your co-workers for recommendations when choosing a union. Be aware, that even if all your co-workers are in the same union, you are not obligated to choose the same union or any union if you do not want to.
You can find links to the different trade unions’ websites here. Also, most trade unions are members of bigger organizations which are Akademikerne and Fagbevægelsens Hovedorganisation. You can visit their websites to get an overview of their member organizations.
Some trade unions allow free trial memberships where you will have access to their services, e.g. career counseling, workshops, networking, etc.
Some trade unions also offer an application-review service. Before you apply, you can send them your CV and cover letter, and they will get back to you with advice on how it can be improved.
Unemployment insurance funds
Unemployment insurance is voluntary in Denmark. This means that you are not automatically insured against unemployment. By stipulating an unemployment insurance with an unemployment insurance fund (Danish: 'A-kasse'), you will be guaranteed a monthly payment if you lose your job. An A-kasse is a private organization, often associated with specific trade unions. However, you are not obliged to be a member of a trade union to take out insurance with an unemployment insurance fund.
You must meet several conditions to be entitled to Danish unemployment benefits:
- Have been a member of an unemployment insurance fund for at least 1 year (it is possible to aggregate periods from another EU/EEA country)
- Be registered as a jobseeker at your local job center from the first day you are available to the labor market.
- Have received a certain minimum income in total for the past 3 years differentiating between full-time and part-time employment.
- Be available for the labor market. This means, among other things, that you must apply for and be able to take on work with the notice of a day.
- Have a complete and approved CV no later than 2 weeks after you have registered as unemployed at the job center.
Most unemployment insurance funds offer seminars and workshops, as well as individual counseling sessions with job/career advisors to help unemployed members in the job search. Some funds also offer an application-review service that makes it possible for you to get valuable feedback on your CV and cover letter before you apply.
There are many different funds to choose from - you can see a list of unemployment insurance funds on STAR’s website. You can read more about the minimum income and other conditions for obtaining Danish unemployment benefits from an insurance fund on the website of Life in Denmark, and there's also information on unemployment benefits on Workindenmark's website.
Salary insurance is a different kind of insurance offering additional financial security if you lose your job. Instead of the substantially lower unemployment benefits you would receive if you lost your job, a salary insurance will give you up to 90 percent of your salary for several months (depending on the insurance).
The salary insurance will take effect if you are laid off, unemployed due to illness, or unemployed due to an accident. The salary insurance will not take effect if you resign or if you are laid off due to fraud.
Professions that require authorization
Some professions in Denmark are regulated by law, and you will need to apply for an authorization to work in that profession in Denmark. Professions that need authorization are, e.g., doctor, nurse, psychologist, real estate agent, teacher, etc.